Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

AI Summary. The Congressional Budget Office projects the federal deficit will grow from $1.9tn (6.2% of GDP) to $2.7tn by 2035, well above the 3.8% of GDP average of the past 50 years. Outlays are projected to rise to 24.4% of GDP, driven by growth in Social Security and Medicare spending and rising net interest costs, while revenues reach 18.3%.

CBO Staff Congressional Budget Office
Date Posted:
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Database

.@USCBO projects a deficit of 6.2% of GDP in 2025, down from 6.6% in 2024. Outlays at 23.3% of GDP would exceed the long-term mean by 2.2pp; revenue of 17.1% is just 0.2pp under its long-term mean. Projections beyond 2025 assume the expiration of TCJA.

How large will federal deficits grow over the next decade?

Core argument: CBO projects the federal deficit at $1.9 trillion in fiscal 2025, or 6.2% of GDP, growing to $2.7 trillion by 2035, when the adjusted deficit equals 6.1% of GDP, compared with the 3.8% average of the past 50 years.

In CBO’s baseline projections, the federal budget deficit in fiscal year 2025 is $1.9T. The deficit grows to $2.7 trillion by 2035. It amounts to 6.2% of GDP in 2025 and drops to 5.2% by 2027 as revenues increase faster than outlays. In later years, outlays increase faster than revenues, on average. In 2035, the adjusted deficit equals 6.1% of GDP—significantly more than the 3.8% that deficits have averaged over the past 50 years. Federal outlays in 2025 total $7T, or 23.3% of GDP. They remain close to that level through 2028 and then rise, reaching 24.4% of GDP in 2035. The main reasons for that increase are growth in spending for Social Security and Medicare and rising net interest costs. Revenues total $5.2T, or 17.1% of GDP, in 2025. They rise to 18.2% of GDP by 2027, in part because of the scheduled expiration of provisions of the 2017 tax act. Revenues decline as a share of GDP over the next two years, falling to 17.9% in 2029, but then generally increase, reaching 18.3% in 2035.

Takeaways by Macro Roundup® AI

  1. CBO projects the federal deficit at $1.9 trillion in fiscal 2025, or 6.2% of GDP, growing to $2.7 trillion by 2035, when the adjusted deficit equals 6.1% of GDP, compared with the 3.8% average of the past 50 years.
  2. CBO projects federal outlays of $7 trillion in 2025, or 23.3% of GDP, rising to 24.4% of GDP by 2035, mainly because of growth in Social Security and Medicare spending and rising net interest costs.
  3. CBO projects revenues of $5.2 trillion in 2025, or 17.1% of GDP, rising to 18.2% by 2027, in part because of the scheduled expiration of provisions of the 2017 tax act, then falling to 17.9% in 2029 before reaching 18.3% in 2035.

Related Articles:

  • An Update to the Budget and Economic Outlook: 2024 to 2034 — The Congressional Budget Office projects a federal budget deficit of $1.9tn in fiscal 2024, or $2tn excluding payment-timing shifts, rising to $2.8tn by 2034. On that adjusted basis, deficits equal 7% of gross domestic product in 2024, dip to 5.5% by 2027, and reach 6.9% by 2034, versus a 3.7% average over the past 50 years.
  • The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budget — The Congressional Budget Office projects that if private investment were more sensitive to federal deficits, debt held by the public would exceed 250% of GDP and real national income per person would be 18% ($21,300) lower than its baseline, with the average interest rate on federal debt 2pp higher.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.
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